Find Medicare Part D Confusing? You're Not Alone

Some thoughts on how the prescription drug benefit could be improved.

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As anyone who's ever tried to decipher the Part D Medicare drug benefit knows, user friendly it's not. Seniors typically have dozens of plans to choose from, all with different moving parts—deductibles, copayments, coinsurance, covered drugs—not to mention that mother of all confounders, the so-called doughnut hole into which seniors fall after they've accrued a few thousand in drug costs. Until they reach a certain threshold and catastrophic coverage kicks in, they're responsible for paying the full freight.

Now the Journal of the American Medical Association has released a pair of studies that examine seniors' understanding of their costs under Part D, and how those costs affect "adherence" to their prescription drug regimens. One study found that—surprise!—60 percent of a random sample of seniors enrolled in a plan through Kaiser Permanente didn't know that it had a doughnut hole. Just over a third of these seniors reported that drug costs had affected their behavior, causing them to switch to a cheaper drug or not fill a prescription, for example. The other JAMA study found that seniors were less likely to report problems sticking to their drug regimens because of costs after the Medicare drug benefit began in 2006. But the sickest patients didn't see the same improvement.

Since the benefit began, experts and advocates have talked about how difficult it is to understand (very) and how much it actually improves seniors' ability to afford their prescription drugs (that depends). The two issues are often related. If seniors don't understand how their plan works—that certain drugs have a straight $25 copayment, for instance, while others in higher "tiers" require an out-of-pocket payment of 25 percent or more—their budget may come up short, leading them to skip doses or not fill prescriptions. Likewise, lack of understanding can lead seniors to neglect to ask their doctors about switching to generic drugs, for example, or to sift through all the available plans every single year at sign-up time to make sure they're still getting the most affordable coverage.

But, surely, I thought, there must be other changes that would make the Part D benefit more understandable and affordable—and free seniors from the heavy lifting. I asked the experts for their thoughts, and they had plenty of ideas. Here's a sampling:

  • Standardize the plans. Instead of more than 3,900 plans with myriad cost-sharing and coverage variations, many experts advocate offering just a handful of standard plan designs, with a limited number of copayment, deductible, and doughnut hole (or gap) coverage options, for example. "Let's have a relative few ways of doing things that people can understand," says Jack Hoadley, research professor at the Georgetown Health Policy Institute. "Then you can compete over having better quality or better services."
    • Standardize the language plans used to describe coverage. One plan says it covers "preferred" drugs in the doughnut hole, another says it covers "some" drugs in the gap. You have to read the fine print to understand what they mean and figure out the best option.
      • Reduce the number of plans. Some plans in some markets are virtually indistinguishable, leading to many options but few real choices.
        • Reconfigure the benefit design so that it promotes the accepted standard of care. For example, drug tiers are now almost universal in Medicare Part D plans, requiring beneficiaries to pay up to a third of a drug's cost instead of a flat copayment, usually for pricey drugs prescribed to treat serious conditions. "It makes no sense that if you're diagnosed with multiple sclerosis you have to pay 33 percent of the cost of the drug, when standard therapy says you should get one of those drugs," says Dan Mendelson, president of Avalere Health, a healthcare research company.
          • Sell gap insurance. Allow people to buy insurance, perhaps a supplemental plan, for coverage in the doughnut hole. Only about 1 in 10 beneficiaries will hit the doughnut hole, but for those people, the costs can be devastating. Currently only one plan nationwide offers gap coverage for brand-name drugs, while many plans offer some generic drug gap coverage.
          • What do you think would help improve the benefit?